USA > Connecticut > Connecticut as a colony and as a state; or, One of the original thirteen, Volume IV > Part 13
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25
The inventive genius of the State had not then stimulated manufactures ; and the two leading occupations, agriculture and commerce, were derived from the land and the water close at hand. Consequently, marine insurance was early an object with those companies. In 1794, John Caldwell advertised to take marine insurance in the name of the Con- necticut Insurance Company; in 1795, July 27, he, with Jeremiah Wadsworth, Sanford & Wadsworth, Elias Ship- man, and John Morgan, formed a partnership known as the Hartford and New Haven Insurance Company, New Haven being inserted because it was the residence of Elias Ship- man; and in 1803 he became president of a company which then obtained a charter as a marine insurance company, and was known as the Hartford Marine Insurance Company
215
CONNECTICUT AS COLONY AND STATE
from 1805 until 1825, when it was absorbed in the Protection Fire Insurance Company. The Hartford Fire Insurance Company was established in 1810; and the third of the trio of early fire insurance companies, the Aetna, was organized in 1819.
The marine risks were generally taken for voyages to the West Indies and neighboring islands; sometimes to Charles- ton, but rarely to Europe. That would have involved super- human courage. This early marine and fire insurance was individual and personal, generally being of the nature of a private contract. The stipulations as to rate and terms varied according to arrangement each time, likewise the con- ditions for paying the premiums. Generally, the amount was to be taken from the profit of the voyage. These voyages were often superintended by citizens of position and ability, who went with the ship to attend to the interest of the owners ; as in the case of Joel Root of New Haven, who in 1802 sailed on the Huron, of which he was a shareholder, and was absent for three years in an eminently successful voyage around the world.
In such cases, the integrity of the owners was almost assumed by the fact that an insurance policy was granted to them. The country was so small, the inhabitants were so few, and the sway of Puritan principles was so widespread, that it was comparatively easy to restrict policies to men of good reputation. Sometimes a desirable rebate was made in consideration of avoiding a certain port, although the policy often allowed vessels to go to ports other than those of depar- ture and arrival, if circumstances made it necessary. There was a wide variation in the amounts to be paid by the insurers, and the sum was often divided among the partners accord- ing to preference and ability. The variety of perils which
216
CONNECTICUT AS A STATE
were risked was also great ;- "perils of seas, of men of war, fires, enemies, pirates, rovers, thieves, jettisons, letters of mart and countermart, surprisals, taking at sea, arrests, restraints, and detainments of all kings, princes, or people of what nation, condition or quality soever; barratry of the master (unless the assured be the owner of the vessel) and mariners, and all other losses, perils and misfortunes, that have or shall come to the hurt, detriment or damage of the said vessel or any part thereof, for which assurers are legally accountable."
The origin of the insurance interest is thus clearly traceable to the soil and geographical position of the State; the remark- able success and perpetuity of that business and of some of the corporations therefrom upspringing are just as dis- tinctly derived from the character of the notable men who conducted those enterprises in their beginnings.
The pre-eminence of Hartford companies over others is evidently partly owing to the city's position at the head of sloop-navigation, making it a centre of trade for the rich Con- necticut valley ; to the fact that those companies were started by men of well-known ability, who personally interested them- selves in the details of the business, and were also so con- nected with public affairs that their association with private enterprises was very valuable; and to another fact, that for years it has been easy to establish such companies, because both capital, and men well trained in the business of found- ing and maintaining such enterprises could be readily secured at once on the spot.
The name of Wadsworth gave significance to the first underwriting firm; for Jeremiah, the son of Daniel who had been a pastor of the First Church, was the father of Daniel whose name still lives in his gifts to Hartford. Jeremiah Wadsworth had taken enough voyages as master to give him
217
CONNECTICUT AS COLONY AND STATE
experience valuable in underwriting; he had served as com- missary-general of purchases for the Continental and French armies, and had been one of the founders of the Bank of North America in Philadelphia, was a director in the first United States Bank, and was foremost in organizing the Hartford Bank, of which he declined the presidency. His financial reputation was attested by the fact that he was presi- dent of the Bank of New York at the urgent advice of Ham- ilton; his public spirit, by the number of his terms in Con- gress. His son inherited his fortune, his prestige, his gener- osity and public spirit, more perhaps than his business enter- prise. The Wadsworth Atheneum in Hartford is the memo- rial of the son; for he gave the site (his own home) and a large sum of money for the building, which has become the treasure-house of the city's art and antiquities.
Major John Caldwell was a builder and owner of ships, was largely interested in their cargoes, and held many offices of trust; being sent to the Legislature twenty times, being a member of the commission for building the State-house, one of the founders of the School for the Deaf and Dumb, the first major of the Governor's Horse Guards, and a coadjutor of John Morgan in the building of the bridge across the Con- necticut River.
Ezekiel Williams was another prominent man who was a pioneer in insurance. His grandfather's sermons had inspired the first Governor Trumbull; his uncle William Williams was one of the signers; a grand-uncle had served as both preacher and fighter in the Revolutionary War, and also as rector of Yale College.
So, too, Goodwin and Hudson founded the Hartford Courant, that admirable journal that since 1764, has dealt out
218
John Goldwell
CONNECTICUT AS A STATE
news to the State, and promoted good living and good writ- ing.
When men of such character and standing applied them- selves personally to the furtherance of a new enterprise, the community was inspired with confidence, and an incalculable momentum was given.
The Protection Fire Insurance Company, which had inher- ited much from the Hartford, was for many years in the very front rank of Connecticut corporations, and was widely known as the representative of Hartford Insurance Com- panies. Its first president, William Wolcott Ellsworth, had been the last secretary of the Hartford. The son of the Chief Justice, he carried public responsibility all his life, being Governor four times, and afterwards Judge of the Supreme Court. The secretary, Thomas Clap Perkins, a lawyer of great eminence, was no less a tower of strength to the com- pany.
The Protection was fortunate in grasping the business of the newly-developed West, at the time when its importance was not appreciated by all. This wise stroke of policy was the work of Ephraim Robins, who made his headquarters in Cincinnati a rallying-place for the leaders of the Whig party, and in other tactful ways so pushed his business that in twenty years he took $3,000,000 in premiums.
Another advantageous innovation of the Protection was sending out a superintendent of agencies. Acting in this capacity Mark Howard, an Englishman who had brought much courage and insight with him to the New World, went out to Saint Louis in 1849, when that city was suffering from the plague of cholera, made more horrible by a devas- tating fire. Many would have thought it discreet to carry on business at a safe distance from the stricken city; but Mr.
219
CONNECTICUT AS COLONY AND STATE
Howard did not flinch a moment, and personally paid the claims of his company and of the Aetna, to the lasting credit of Connecticut insurance. But the capital was insufficient to easily meet some crushing marine losses; and lack of courage to fight disaster, and possibly lack of proper provision for the rainy day, brought the affairs of the Protection to an untimely close in 1854.
The Hartford Fire Insurance Company, founded in 1810, and now the oldest stock insurance company in the United States, was not behind the Hartford in securing a noted man as president; for General Nathaniel Terry was a chief in more ways than one. He was six feet and four inches tall, and was constantly in the forefront of affairs. For long periods each he was mayor, judge, member of Congress. He was connected with the Wadsworth family by marrying Catherine, the daughter of Colonel Jeremiah Wadsworth; and the lustre of his name has been made still brighter in later years by his grandson, the hero of Fort Fisher. He remained at the head of the company till 1835.
The Aetna Insurance Company was incorporated in 1819, as a corrective to the indolence of the secretary of the Hart- ford Fire, who did not manifest that alacrity in securing patrons that may now be often observed. This famous cor- poration, whose suggestive if not reassuring name is familiar in all parts of our land, was managed with exceeding wisdom from the outset. Caution and enterprise were discreetly mingled in its counsels.
There was abundant courage in seeking business in distant fields and in facing disasters, but much conservatism was observed in details of expenditure. In those days, each risk was discussed by the directors; and when a journey was taken by an officer of the company for its benefit, his home salary
220
1
CONNECTICUT AS A STATE
was suspended so long as he was receiving his expenses and a few dollars a day as a remuneration. But this care about details was the foundation of an enviable reputation and resulting prosperity.
It took a long time for insurance boards to learn that they must not divide all the profits at each meeting, but must lay by a reserve fund for the sudden demands of great losses. In the process of learning, many weak companies expired.
The idea of noting the differing results of insuring dif- ferent classes of buildings or merchandise, and of collecting therefrom a classified list of risks, with a corresponding list of rates and a proportionate security of indemnity to the insured and of profits to the insurers, is said to have orig- inated in the office of the Aetna, where the secretary was requested to keep a blank book in which he should record sta- tistics of fires as they were described in the newspapers, and to give an account of the kind of place and property in each case. This was a long step towards scientific treatment of the business.
In 1834 the Aetna issued the first fire policy in Chicago. It was exhibited in that city as a curiosity till the great fire destroyed it. Much pioneer work was done by those early directors, who traveled over the country in a leisurely way, examining the villages and towns with an eye to insurance prospects, but with a thrifty habit of saving money for the company and thereby for themselves eventually. It is related that Joseph Morgan, the grandfather of J. Pierpont Mor- gan, performed such a journey, covering over six thousand miles, at an average daily expense, including hotels, of $3.29 a day !
In these cases, the small beginnings seemed to lead to great endings. The Aetna began in 1819 with a capital of $150,-
221
CONNECTICUT AS COLONY AND STATE
000. The expenses of the first year, including $225 for the secretary's salary and for rent, reached the alarming total of $451.82. In 1850 the capital was doubled, the assets were $456,327.46, and the liability for losses, $141,544. In 1881 its capital was increased to $4,000,000, making it the largest fire-insurance company in the country. In 1903 its assets had reached the vast sum of $14,949,520.36, with a net surplus of $6,022,803.36, and a surplus to policy-holders of $10,- 022,603.36. Such figures speak for themselves of a rare career of deserved success.
The process of making money by fire-insurance presents little monotony, but is full of dramatic crises, and in the case of the famous surviving companies, has afforded opportu- nity for the display of magnificent business heroism. After each of the great fires which have appalled the country, the important companies rose to the situation grandly.
Far back,in the New York fire of 1835, in the dismay and general fear that the losses were so great that no insurance company could pay them, it was as a messenger of glad tid- ings that Eliphalet Terry, the president of the Hartford Fire, arrived, having driven with all speed in a sleigh, in freez- ing weather, from Hartford, brining his secretary, and pro- ceeded to pay in full all losses and to take new insurance. As a result, dividends were omitted for several years; but there was a great reward in future business. On more than one similar occasion did the directors pledge their own fortunes, with the probability of having to redeem their promises.
.
Ten years later, another disastrous fire burned up $6,000,- 000 worth of property in the business centre of New York, and then again the Aetna was a heavy loser. The directors were called together and sat in silence while the president, Thomas K. Brace, unlocked the safe and took out the stocks
222
CONNECTICUT AS A STATE
and bonds that were all that lay between them and failure. In the graphic words of Mr. Woodward, from whose inter- esting book much of this information is derived, "The silence was broken by the question, 'Mr. Brace, what will you do?' 'Do?' replied he. 'Go to New York and pay the losses, if it takes every dollar there,' pointing to the packages, 'and my own fortune besides.' 'Good, good,' responded the others, 'We will stand by you with our fortunes also.'" And again honesty proved the best policy.
The company was enterprising in details as well as stanch in principles. Its agent at Cincinnati prepared the first blank proof of loss in 1853; in 1857, it first used outline charts, and indeed in 1819, it had laid down rules for the guidance of its agents, that have been widely recognized as funda- mental. Long before the law of the State enforced the rule, the Aetna promoted the reputation of Hartford by fighting out in its own directors' room the question of establishing a reserve fund for reinsuring outstanding risks.
But in that Waterloo for fire insurance companies, the Chicago fire, which swept away even hope for a time, the fidelity of the Hartford companies had its most noted test. Surely, thought the despairing crowds for whom the earth seemed to refuse a shelter, there is none that can deliver us. Imagine the glad relief when the news came that the Hart- ford Fire, the Aetna, and the Phoenix would pay in full on the spot.
The genial Marshall Jewell, a director of the Phoenix, who, as Governor of Connecticut, Postmaster-General under Grant, and Minister to Russia, saw life in many phases, prob- ably never experienced more fully the pleasure of relieving distress than when, after having, at the request of the com- pany, hastened from Detroit, without stopping even to put
223
CONNECTICUT AS COLONY AND STATE
on traveling clothes, he mounted a dry-goods box on what had been a street, and announced to the surging crowd around him that he had been sent to pay in full the claims of the Phonix Company of Hartford. And he did not wait, but began then and there by paying the full face value of a $10,- 000 policy properly attested and presented to him, using the top of his silk hat as a desk in writing the check. A placard was soon displayed bearing the glad tidings, and "as the news spread from one to another, the multitude cheered and cried, and laughed by turns." The Phoenix Company lost by this fire more than one and one-half times its capital; but the stockholders paid in $300,000 more, and went on.
A fire which swept over three thousand acres in the heart of a city necessarily inflicted fearful losses on a company like the Aetna. Perhaps the sufferers did not dare to hope for full payment; and indeed, when the home office counted up that total, $3,782,000, it was clear that Hartford shared the dis- aster with Chicago. According to law, the capital was imme- diately reduced one-half to match the reduced assets, and was then restored by contributions in cash of $1,500,000. In a year came the Boston fire, which cost the Aetna $1,635,067. This was likewise paid, making in all $5,500,000 expended by the company to keep its name unsullied. The latent hero- ism that had astonished the world during the war, has been manifested on other fields.
In the Hartford Fire Company the same spirit prevailed. $2,000,000 were needed to cover the Chicago losses, but every one was paid in full, although it was done by heroic exertions. The Connecticut Mutual lent a half million to its comrade in distress, and the steadfast old Hartford Bank promised its help to the limit of its power. After paying the losses, the amount left in the treasury being below that
224
CONNECTICUT AS A STATE
required by law, the capital was reduced to $500,000 by vote of the directors, and immediately raised to a full million by new subscriptions, with a premium of $85 a share. Hardly had the directors had time to look around them after thus wrestling with misfortune, when, in the next year, came another crash, that of the Boston fire. This involved a loss of nearly half a million, which was fully paid.
Some young companies were wiped out of existence by these great and sudden disasters. One, the Orient, was not formed when Chicago was burning; but had the hard for- tune, before it had completed its first year, to lose heavily by the Boston fire. But it paid every dollar, and by repeatedly turning dividends into the treasury, at length restored its cap- ital to its first amount.
The Merchants Fire Insurance Company, when its losses were found to be beyond its power to meet, and it was urged to keep enough capital to live, refused utterly to do so, paid out its last dollar, and ceased to exist. Some of the men con- nected with it immediately formed a new company, the Na- tional, now one of the foremost in New England.
Five out of nine Hartford companies were destroyed by the Chicago fire, the loss mounting up to over eleven mil- lions, and it is no exaggeration to say that Hartford was only second to Chicago in the loss from the great disaster.
What widespread disappointment and retrenchment fol- lowed among the private individuals who made up the great company of stockohlders in these organizations, can be esti- mated only by careful consideration. Houses stood unfin- ished, marriages were postponed, and for years, men, women, and children who had no connection with the unfortunate city in Illinois, and who depended on their ordinary assured
225
CONNECTICUT AS COLONY AND STATE
income from insurance stock, were impoverished, because the Chicago sufferers were fully and gladly reimbursed.
Unsparing praise is deserved by men who, in an unpar- alleled emergency, which would have been a justification for compromise, resolved that honorable obligations should be honorably met, if it took the last dollar under their control. It was a gallant action by gallant corporations, and proved unmistakably that they do sometimes have souls. It is very easy to say, after all is over, that it was fine policy for these companies, and it is true; but it is not hard to find abundant instances of the opposite practice among those who call it good business, and who have in some instances prospered by it.
There was a time when Life Insurance was regarded as an impious attempt to change the decrees of Providence; but all that has passed, and it is looked on rather as a religious duty. The business has taken long strides, and is one of the giants of our time. It was not till 1760, according to John M. Holcombe, that any regularly organized company existed even in England. Now the United States leads the world in the sums involved, having over eight billions of insurance in force, and accumulated assets of at least two billions. Con- sequently, it assumes a very important place in our affairs. This branch of insurance has been very successful in Connec- ticut, but in Hartford only, attempts in New Haven and other places in the State having been conspicuous by their failures.
Among the six life companies now existing in the State, the Connecticut Mutual Life is oldest, having been incorporated in 1846. It began its honorable career with due regard to the economy which had been so useful in the youth of the fire-insurance companies. Great caution was observed not
226
CONNECTICUT AS A STATE
only in framing laws to guard the new enterprise, but in the actual administration of the company's affairs.
The success of the life-insurance system of the State was really established by the three founders of this company, Dr. Guy R. Phelps, E. O. Goodwin, and Elisha R. Pratt; although such an achievement would scarcely be expected from a retired physician and apothecary, a lawyer in poor health, and a carriage-maker. Each one proved his ability, and especially did the rigid economy and power as a financier of Dr. Phelps leave a lasting impress on his company. James Goodwin, who married Lucy Morgan, the sister of Junius S. Morgan, the London banker and the father of J. Pierpont Morgan, also presided for many years over the Connecticut Mutual very wisely; so that it attained an enviable position, with a reputation for conservatism, fairness to its clients, and deserved success.
The Aetna Insurance Company had, almost since its origin, possessed the privilege of granting annuities; but it did not expand that privilege into life insurance till 1850, some time after the Connecticut Mutual had demonstrated the desira- bility of the business. The delay did not seem to be harmful, for unequaled success has attended the career of the Aetna Life, placing it among the leading companies of its kind in the country. It has been fortunate-or perhaps, more accu- rately, very wise-in its policy, its investments, and conse- quently, its ability to amass and distribute wealth. Its great success has been attributed to insight in selecting and retaining Western farm lands as an investment.
Two flourishing existing companies owe their origin to faith in conditions different from those usually stipulated :- the Phoenix Mutual Life and the Connecticut General Life. the former began in 1851 as the American Temperance Insur-
227
CONNECTICUT AS COLONY AND STATE
ance Company, basing its ten per cent. lower rates on the probability of longevity among tee-totallers. It was undoubt- edly true that abstinence promoted health; but it did not always cause a desire to insure; and to the non-abstainer the necessity of signing a temperance-pledge was not alluring; hence the temperance part was dropped and the name was changed in 1861. In 1865, the Connecticut General was started with the avowed purpose of insuring impaired lives; but two years were enough to prove that there was no profit in that; and the company has since been successful with busi- ness under the prevailing conditions.
The numerous small companies in various parts of the State scarcely need to be chronicled here; unless it be the first to be incorporated, in 1794, the Norwich Mutual Assurance Com- pany, which by regarding prudent limitations still pursues the even tenor of its way. The parties in each policy have gener- ally been well known to each other; and since 1838, policies have been restricted to dwellings, and have been limited to risks of a thousand dollars each. This San Marino among insurance companies has a capital of $12,000, its president's salary is $200, and Policy No. I is still in force on the house of the late Benjamin Huntington.
The local mutual fire-insurance companies have been suc- cessful as a system, the life, unsuccessful; the reason being that as fire risks do not materially change by age, the com- panies can always secure adequate premiums; while co-oper- ative life associations always base their premiums on the deaths among the young, and consequently die as the mem- bers begin to age.
Of the forty mutual fire companies that the State has seen, all established on the principle that the profits be divided, in various ways, among the insured, generally so as to reduce
228
CONNECTICUT AS A STATE
premiums, only eleven now exist. Some of them have their individual peculiarities, as the Hartford County Mutual Fire, which was once limited to buildings in the county and outside the city of Hartford. This restriction, modified to include the city in 1853, was of much value to policy-holders when the famous fires made the large companies tremble to their foun- dations. It began with small things; for twelve dollars expressed the losses and twelve dollars the surplus, of the first year.
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.